Fund expenses and vertical structures of the fund industryJae-Joon Han, Kyeong-Hoon Kang and Seungyeon Won Economic Modelling, 2013, vol. 35, issue C, 856-864 Abstract: This paper provides a theoretical model on the determination of fund expenses, focusing on vertical structures of the fund industry and customer switching costs. We also empirically test our theoretical findings using data from the Korean fund market. Our first theoretical finding is that a distribution channel that is integrated with an asset management company has an incentive to charge higher distribution fees than an independent channel: a vertically integrated distribution channel tends to raise the costs of rival asset management companies. Our second finding is that the equilibrium is asymmetric in certain circumstances: a channel may want to remain independent, whereas the other wants to be vertically integrated with an asset management company. Our empirical analysis showed evidence supporting the first theoretical prediction. Keywords: Fund expenses; Vertical structures of fund industry; Switching costs of customers; Distribution channels; Asset management companies; Raising rival's costs (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:35:y:2013:i:c:p:856-864 DOI: 10.1016/j.econmod.2013.08.033 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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